The Basics of Evaluating PBM Contracts

Payors today face unprecedented degrees of complexity when conducting a pharmacy benefit manager (PBM) request for proposal (RFP) or evaluating PBM contracts. To stay competitive, payors must navigate an ambiguous and changing pricing environment. That requires a solid understanding of PBM contracting.

Evaluation of a traditional RFP or PBM contract should begin with financial analysis of the following four key elements: discount guarantees (typically understood as point-of-sale ingredient costs), dispensing fees, rebate guarantees, and PBM administrative fees. This paper addresses various points of consideration when attempting a financial analysis of these contract elements.